Reopening an Employment Door to the Young

In the article “Reopening an Employment Door to the Young,” by ROBERT W. GOLDFARB, he discusses the importance of  hiring young people. Most hiring managers hire workers based on their credentials and their intuition about the worker. According to GoldFarb: “more young people would be hired if they had the right qualifications, but too few have the skill and discipline needed to succeed in today’s demanding workplace.” In other words, employers judge young people without even giving them a chance. They base their decisions on the belief that  they are young and are incapable of handling responsibility and duties.

Furthermore, Goldfarb interviewed over 200 people and he found that about half of the young people had received a liberal arts degree. However, many of them regretted majoring in a discipline now viewed as unworkable or impractical like philosophy. In addition, many liberal arts graduates are eager to find an employer that is willing to train them in skills that don’t require a degree in engineering or computer science according to Goldfarb. Many just want a chance to work and master a skill for the betterment of the company.  However, most employers today hire workers who come with technical skills already. Due to this, the young people are put at a disadvantage because they are now competing against their peers and experienced worker for entry level jobs.

 

Lastly, employers need to rethink about the ways they go about hiring workers. They shouldn’t hire workers based on their credentials, instead, they should seek to hire people who are determined, energetic, and eager to learn new things. These are some of the qualities that young people inherit and are looking for employers to take a chance with them. According to Goldfarb: “ And businesses that gain a reputation for preparing young people to become productive employees are likely to have a competitive advantage as the economy recovers and older workers can afford to retire.” The clock is running out as  the baby boomer now reach their retirement age, and employers need to rethink who is going to carry on the future of the company.

http://www.nytimes.com/2014/02/02/jobs/reopening-an-employment-door-to-the-young.html?ref=economy&_r=0

"Obama wants businesses to raise pay. Here’s why they probably won’t listen."

http://www.washingtonpost.com/blogs/wonkblog/wp/2014/01/29/obama-is-asking-businesses-to-raise-wages-heres-why-they-likely-wont-listen/

As the economy continues to recover, politicians, especially President Obama, look for ways to help it along.  One theory, though it seems to be misguided, is that if companies raise hourly wages, U.S. citizens will have more disposable income, which they will use to stimulate the economy and so the whole country will be better off. While this seems logical at first, it fails to take into account the importance of shareholders.  From a purely economic stand point, the satisfaction of the share holders is more important than that of the more easily replaced hourly worker.  Not to say the worker is unimportant, just less important in terms of the monetary value he or she brings to the company.  Thus, companies must prioritize the income of the shareholders, sometimes at the expense of the worker since without the shareholders, there would be no financing and eventually, no company at all.

FED Tapering Asset Purchases

http://www.forbes.com/sites/samanthasharf/2014/01/29/fed-to-further-trim-asset-purchases-to-65-billion/

Ben Bernanke, in his final meeting a chairman, announced that the Fed would continue tapering asset purchases. Bonds and treasury purchases are to be decreased due to recent economic expansion. The committee said that unemployment was higher than it would like, but household spending and business investment were accelerating.  Growth could be higher but current fiscal policy was credited with underperformance. In June, Bernanke first announced plans to taper purchases which caused a 200 point drop in the Dow and caused investors to switch to more secure investments. Many were surprised to see the FED taking this action after seeing only 74,000 jobs added in December (compared to 200,000 in October and November)

Germany's energy transition: Sunny, windy, costly, and dirty

Sigmar Gabriel is currently the leader of the Social Democratic Party of Germany (SPD), who has intentions to run for chancellor 2017. He has made a coalition deal with the current chancellor of Germany, Angela Merkel. As a part of this deal he is now considered to be a "super minister" because he is going to be combining two portfolios, energy and the economy. Under this reform, Germany will simultaneously stop using energy created from fossil fuels and nuclear power plants. Gabriel is using the marketing slogan "Energiewende" (which means turn or revolution) as promotion.

Energiewende consists of a timetable for different goals. Germany's final nuclear power plant is to be shut down by 2022. Renewable energy from the sun, wind, and biomass are set to rise to become 80% of electric power in Germany. The main goal is to reduce the emission of greenhouse gases by 70% in 2040, and 80-95% by 2050.

It appears that German consumers and voters like the goals that are being set under Energiewende, however they are beginning to dislike the side effects of this domestic reform. The main issue that many Germans are beginning to have with Energiewende is the rising cost of energy. It is not cheap to subsidize renewable energy sources. The average household in Germany has to pay 355 dollars a year to subsidize renewable energy sources under Energiewende. The cost of production is also rising for German companies making them less competitive. New estimates by a consulting firm, known as McKinsey, suggest that there is almost nothing that can be done to reduce the cost of subsidizing. On top of that, Germany's unemployment rate is predicted to rise due to the disband of nuclear power plants and other facilities that create energy from fossil fuels.

There are also other issues with renewable energy besides cost. The sun does not always shine, and the wind does not always blow, making these alternative sources of energy unreliable. As for now, conventional power plants have to remain online in order to assure a continuous supply of energy.

Mr. Gabriel is taking a massive risk with Energiewende. Will it be worth the reward?     


http://www.economist.com/news/europe/21594336-germanys-new-super-minister-energy-and-economy-has-his-work-cut-out-sunny-windy-costly

The Tale of a House, and an Entire Market

Link to article

The article, "The Tale of a House, and an Entire Market" published by the New York Times, seeks to explain the roller coaster economy of the housing market. The author, Shaila Dewan, begins by concentrating on one house in Maryland to represent the "American Dream"; not only a home, but also an investment to turn around and sell it for profit.

The housing market fueled the economy as the bubble grew, and was soon to blame for the downturn of the past seven years. As the economy rebuilds, the housing prices have now jumped 10-25%; concerning economists as this could create, yet, another bubble. There are still high lending standards held by banks to discourage a second bubble, but this held back 12.5 million Americans from owning homes who would have qualified prior to the crash. Even those who had been approved have different feelings toward the American Dream, the home owned is still a better investment than renting, it is still a home, "But it is no longer an A.T.M., a source of ready cash for a better lifestyle."

The article continues through owners of the house in Maryland. Including one owner who ended up defaulting on loans that banks originally pre-approved her when in reality, she could not afford. The owner bought the house for $540,000 in 2006 only to be sold to an affiliate of Greenway for $215,000 cash in 2012. Greenway renovated the house to turn it around to sell it for $381,000 in 2013. This story of the Maryland house is interesting as it represents the twists and turns of the housing market, and how the winners and losers achieve their status based on timing. The article does conclude that some believe the even through the uncertainty of finances, owning a home is a "social safety net, whether or not is profitable." Some economists still argue that homeownership is overly pushed by public policy, where the return on investment is just too optimistic.

Privatisation: The $9 Trillion Sale

http://www.economist.com/news/leaders/21593453-governments-should-launch-new-wave-privatisations-time-centred-property-9

The idea behind this privatization is that the US has many assets, such as the Yellowstone National Park, which are worth billions of dollars.  In fact, if you put all of the land, buildings and subsoil resources together, it is worth approximately $35 trillion.  The reason for noting this is because if you were in extreme debt, you would naturally want to sell some of your assets in order to pay off that debt.  The US, however, should not necessarily sell all assets, especially big ones like the Yellowstone National Park, but they should consider removing some of these "assets" since there is a large amount of debt currently.  Also, underneath some of these assets, there are oil reserves, which could profit up to $9 trillion dollars.
These leads to the question, should some of these areas, which we leave essentially off limits for private companies, be thought about in terms of how it will profit the US economy? Economists need to think about how much revenue would be lost by privatizing these assets.  It could be very profitable and a great idea, but it also could harm the US economy much more than aiding it.  It needs to be done during a time when markets are booming.
By looking at the past times of privatization, specifically during times of Thatcher and Reagan.  It may be time to consider looking into what assets the US has waiting for us with buildings, land and potential resources.

Growth and Unemployment

Link to the Article

The article Growth and Unemployment explains how the economy had gained back its growth with rising unemployment rate. From the chart that the author shows us, we know that when GDP growth is low, unemployment rate stays at high levels; when GDP growth is high, unemployment rate stays at low levels. Rapid GDP growth keeps unemployment rate from rising due to increasing productivity: firms have more advanced technology. That means firms can produce the same amount of products with fewer labors. That is how people feel the economy growth increasing while the unemployment rate going up. As we talked about in class, the unemployment rate is the fraction of the labor force which is unemployed, one reason the unemployment rate keeps the upward trend is that the working-age group growing rapidly. Unemployment rate does not reflect the performance of our economy 100% right.   

Economic Shift in U.S. & China Batter Markets

http://dealbook.nytimes.com/2014/01/24/a-worldwide-market-slump-gains-traction/?hpw&rref=business

The growth in developing economies over the last decade is largely dependent on two factors: growth in China, and the Fed's stimulation of the economy. With both of these slowing declining, investors pulled their money out of global markets this past week, and the effects have spilled over into other markets, causing the S&P 500 index to decline by 2.1% on Friday, which was the worst decline since June of 2012. The damage is more severe in places like Argentina and Turkey, who are suffering from political unrest already. However, many economists see this as a necessary "market pullback" that needed to happen in order for the market to correct itself after last year's tremendous gains. The American market indexes are still within a few percentage points from their record highs so there is no need for serious concern as of now. Almost all of the economic data shows that the U.S. is gaining strength on its economic recovery and it is a good time to invest.

http://www.economist.com/news/business/21594984-big-tobacco-firms-are-maintaining-their-poise-quietly-wheezing-running-out-puff

This article is about how big tobacco companies are struggling like never before due to record low sales and fewer and fewer young people smoking. The three main tobacco companies in america are Altria, Reynolds and Lollilard have been suffering of late but company experts are still confident in there current and long with standing business model. This may not be the smart move however seeing as smoking is becoming less and less popular. This issue for the tobacco industry could be more widespread than just the US; tobacco companies world wide may have to start rethinking how they market their product.

The typical worker makes no more than Dad did in 1979

When adjusted for inflation, the average American worker makes about the same at a worker in 1979 did.  According to Rex Nutting the productivity of the workers has nearly doubled since 1979.  With price increases of 1.5% and and wage increases at 1.3% the workers are struggling to continue their way of life.  I believe that massive increases in technology could have a hand in the lack of raises and increase in technology.  With machines now being able to do many of the jobs, a workers worth has decreased.  This takes away a strong bargaining chip for workers.

http://www.marketwatch.com/story/the-typical-worker-makes-no-more-than-dad-did-in-1979-2014-01-24